PC Market Struggles Ahead Of Windows 8 Launch As Lenovo Nearly Catches HP for the Worldwide Market Leadership Position, According to IDC

FRAMINGHAM, Mass.--(BUSINESS WIRE)--The worldwide PC market contracted sharply in the third quarter of 2012 (3Q12), with shipments declining 8.6% from the third quarter of 2011, according to the International Data Corporation (IDC) Worldwide Quarterly PC Tracker. The results are below IDC's August forecast of a 3.8% year-on-year market contraction.

“Nevertheless, as vendors line up innovative new products and designs, consumers are likely to respond positively during the tail-end of 4Q12, and that means a potential return to positive growth at the end of this year.”

IDC had expected a quiet quarter as channels focused on clearing out Windows 7 inventory to make space for Windows 8. Continued pressure from other products such as tablets and smartphones, as well as uncertainty over the impact of Windows 8 and the economic outlook, contributed to depressed shipments – largely as expected. Nevertheless, despite an already conservative outlook, the results show the vulnerability of PCs and the loss of mindshare among buyers who until recent years have flocked to back-to-school promotions in the third quarter for PCs. Familiar and persistent factors such as renewed economic issues and budget diversion into other devices also played a part. As a result, all regions saw shipment volumes decline from a year ago.

"PCs are going through a severe slump," said Jay Chou, senior research analyst, Worldwide PC Tracker. "The industry had already weathered a rough second quarter, and now the third quarter was even worse. A weak global economy as well as questions about PC market saturation and delayed replacement cycles are certainly a factor, but the hard question of what is the 'it' product for PCs remain unanswered. While ultrabook prices have come down a little, there are still some significant challenges that will greet Windows 8 in the coming quarter."

"We expected a weak PC market in the lead up to Windows 8 release in the fourth quarter. While the industry has been focused on shaving excess inventory and preparing to launch a new generation of products, consumers have been looking at alternative devices like tablets. In addition, businesses have slowed their refresh cycle as they remain concerned about the broad economic outlook, amid a busy political season," said David Daoud, research director, Personal Computing at IDC. "Nevertheless, as vendors line up innovative new products and designs, consumers are likely to respond positively during the tail-end of 4Q12, and that means a potential return to positive growth at the end of this year."

Regional Outlook

United States – The U.S. market came in slightly weaker than an already negative forecast, contracting 12.4% compared to a forecast of –9.5%. This reflected weaker consumer demand, including a weak back-to-school season, and an industry-wide inventory clean up. The consumer segment was particularly affected as buyers focused on competing products. Demand in the commercial sector was subdued by weaknesses and uncertainty in the broad global economy amid a heated presidential election season. However, IDC believes that the fundamentals for some recovery exist. With the launch of Windows 8 in 4Q12, we expect shipment growth to return to mid-single digits in the fourth quarter and into next year.

EMEA – The EMEA market remained constrained as expected in the third quarter. July and August saw low sell-in levels as vendors focused on ensuring leaner inventory levels after a strong 2Q12, while September sell-in was boosted, as anticipated, by the production of new Windows 8 systems and an attractive ultrabook and ultra slim line up set to hit the shelves end October. Continued economic pressure in the business space and competition from other devices for consumers, however, combined to keep the supply chain and buyers cautious.

Japan – Japan was one of the stronger markets, benefitting from rebuilding efforts. Unfortunately, this "strength" was only relative to other markets – achieved with shipments still falling short of flat from a year ago.

Asia/Pacific (excluding Japan) – The region continued to contract on a year-on-year basis, though growing sequentially from 2Q12. China was mostly on target but the rest of the region came in below expectations as ongoing economic sluggishness and competing device distractions weighed on PC spending this quarter.

Vendor Highlights

HP saw shipments contract more than 16% from a year ago and narrowly held on to the top vendor spot. Distractions caused by its reorganization, challenges in integrating its enterprise acquisitions, and an unclear strategy to regain its course remain key obstacles.

Lenovo, despite slowing growth in Asia, continued to register the highest yearly growth among all top vendors. The vendor maintained its methodical approach to build out channel partnerships and acquire key OEMs in markets outside it home turf, with varying degrees of success. Its persistence as well as missteps of its rivals helped Lenovo to maintain a top 5 position in the U.S., and gain a couple points of share to nearly tie HP for the lead in global shipments.

Dell faced a tough quarter, dropping below its own 2Q12 shipment volume. The vendor saw share declines in all markets and ended the quarter with a 14% decline. Tepid PC refresh activity in the U.S. and EMEA continued to be a key inhibitor for Dell. Although the company has made strides in other areas, with Asia/Pacific becoming its second biggest market after the U.S., its momentum there has also been curtailed by a cooling market.

Acer Group – the vendor has faced an uphill climb to get back into growth mode since the market for low-priced notebooks dimmed. The third quarter was no different, with shipments registering a sequential decline and disappointing notebook volume. However, Acer's aggressive foray into ultrabooks and Windows tablets could help to reverse its fortunes if Windows 8 finds solid acceptance.

Top 5 Vendors, Worldwide PC Shipments, Third Quarter 2012 (Preliminary)
(unit shipments in thousands)
Vendor	3Q12 Shipments	3Q12 Market Share	3Q11 Shipments	3Q11 Market Share	3Q12/3Q11 Growth
1. HP	13,946	15.9%	16,679	17.4%	-16.4%
2. Lenovo	13,824	15.7%	12,543	13.1%	10.2%
3. Dell	9,499	10.8%	11,039	11.5%	-14.0%
4. Acer Group	8,414	9.6%	9,307	9.7%	-9.6%
5. ASUS	6,381	7.3%	5,798	6.0%	10.0%
Others	35,732	40.7%	40,714	42.4%	-12.2%
All Vendors	87,795	100.0%	96,080	100.0%	-8.6%
Source: IDC Worldwide Quarterly PC Tracker, October 10, 2012
Table notes follow the last table

In addition to the table above, a graphic showing the relative market shares of the top 5 PC vendors over the previous five quarters will be available when this press release is posted to IDC.com. The chart is intended for public use in online news articles and social media. Instructions on how to embed this graphic can be found by viewing this press release on IDC.com.

Top 5 Vendors, United States PC Shipments, Third Quarter 2012 (Preliminary)
(unit shipments in thousands)
Vendor	3Q12 Shipments	3Q12 Market Share	3Q11 Shipments	3Q11 Market Share	3Q12/3Q11 Growth
1. HP	4,293	26.1%	5,284	28.2%	-18.8%
2. Dell	3,402	20.7%	4,049	21.6%	-16.0%
3. Apple	2,056	12.5%	2,211	11.8%	-7.0%
4. Lenovo	1,368	8.3%	1,252	6.7%	9.2%
5. Acer Group	1,006	6.1%	1,251	6.7%	-19.6%
Others	4,300	26.2%	4,699	25.1%	-8.5%
All Vendors	16,424	100.0%	18,746	100.0%	-12.4%
Source: IDC Worldwide Quarterly PC Tracker, October 10, 2012

Table Notes:

• Some IDC estimates prior to financial earnings reports.
• Shipments include shipments to distribution channels or end users. OEM sales are counted under the vendor/brand under which they are sold.
• PCs include Desktops, Portables, Mini Notebooks, x86-based Workstations and exclude handhelds, x86 Servers, and Tablets (i.e. iPad and Android-based Tablets as well as Microsoft Windows-based slate Tablets ). Data for all vendors are reported for calendar periods.

IDC's Worldwide Quarterly PC Tracker gathers PC market data in over 80 countries by vendor, form factor, brand, processor, sales channel and user segment. The research includes historical and forecast trend analysis as well as price band and installed base data.

For more information, or to subscribe to the research, please contact Kathy Nagamine at 650-350-6423 or [e-mail].

About IDC

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